On July 24th Countrywide Financial acknowledged that the housing market "might not begin recovering until 2009 because of a decline in house prices," and that even borrowers with good credit are starting to fall behind on their loans. This announcement triggered a sell-off in the stock market, and signals a shift toward a more skeptical view of the future of the housing market than that to which many executives have previously held. According to Vikas Bajaj of the New York Times, Angelo Mozilo, Countrywide's chairman and chief executive, said that "because of a large number of homes on the market, the housing sector would continue to suffer until sometime in 2008 and not begin recovering until 2009."
As a result of the downturn, major lenders such as Countrywide, Wells Fargo, and others have stopped offering risky sub-prime mortgages. But it isn't just sub-prime borrowers who are struggling with payments. Even "credit-worthy" customers are showing the potential to default as home prices fall. "Countrywide said about 5.4 percent of the home equity loans to customers with good credit that it held an interest in were past due at the end of June, up from 2.2 percent at the end of June 2006."
To read the article in its entirety and see detailed statistics, go to Top Lender Sees Mortgage Woes for ‘Good’ Risks
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